OKR is a methodology used to meet the needs of new mechanics of professional activity. Whether due to technological evolution or other impactful events on the global community. The world of work is changing.
However, what does not change is the fact that a company is born with a purpose and operates daily to achieve it. It is the role of all leaders ensure that managers and employees support the main objectives.
But one Asana search, from 2020, reveals that only 26% of employees are clear about how much what they do individually contributes to the company.
Can the problem in question relate to recent transformations in society and jobs?
Whether the answer to the question above is yes or no, the Asana survey also points, with other data, to the root of the problem. Only 16% of workers say that the company effectively sets objectives.
Thus, less than one in five employees clearly see why they do what they do and what their company's objectives are.
It is with the aim of improving these statistics that large global companies are using the OKR methodology.
OKR: what is it?
First adopted by many Silicon Valley companies, OKR is an agile management methodology used to define objectives and measure results. The model was created in the 1970s by Andy Grove, co-founder of Intel.
But why create an innovative model so long ago? That's what you might be wondering.
In fact, it was only at the turn of the millennium that the method began to spread and became a reality for many startups and new types of business, to be side by side in a dynamic scenario.
In addition to Google, one of the main references and where the concept spread, we also have companies that use OKR: LinkedIn, Amazon, Netflix, among others.
Therefore, to understand more about the concept, it is necessary to break down the acronym.
What literally is OKR?
The formula has two components. The letter O represents the objectives (objectives) of the organization, while the letters KR are the key results (Key results), the goals that will lead the company to achieve its objectives.
One of Google's investors, John Doerr, was the one who presented the methodology to employees in 1999. From then on, he developed a technique, the simple bases of which we will present later in this text.
What is the main objective of OKR?
In the context of small and medium-sized companies, the SEBRAE points to the lack of strategic management as one of the essential factors for bankruptcy. OKR is an effective methodology that can be used by any type of company.
Therefore, the main objective of OKRs is to help increase employee engagement. All teams will have in mind the common objective, the mission of the whole and the individual role, in constant alignment so that each new stage is challenging and stimulating.
Furthermore, strategies become measurable and results are presented to everyone. The company becomes less closed to its internal structures and priorities shorten the distances between business objectives and the day-to-day lives of employees.
OKR Examples
When creating OKRs, the objective must derive from the company's strategy and generate noticeable value for the business. If the objective does not have a clear value, it is necessary to review or eliminate it and start everything from scratch.
A basic principle of OKRs is knowing how to deal with errors. Not all key results will always be achieved, and this is part of the method. Even if you don’t “brag”, it is essential to learn from the reasons for failure in order to design new goals for the future.
We will bring two examples of OKRs. One of them, using iFood's vision in its commitment to ESG practices. The other, in a playful way, imagining this text and its reading as part of marketing OKRs. Let's go?
- Goal: to be one of the most aware companies on the market about carbon footprint.
- KR1: Reduce the use of plastic in deliveries by 600 tons;
- KR2: Seek support from more than 100 thousand restaurants;
- KR3: Collect more than 1.5 million donations to combat waste.
This is an example of OKRs aimed at environmental commitments within a company.
Now, let’s think about this text. It is part of a marketing strategy and can be a tip in building the OKR.
- Goal: gain more organic visibility through better positioning in search engines.
- KR1: Release at least four blogposts per week, optimized for SEO;
- KR2: Improve seven contents per week by updating keywords;
- KR3: Change SEO titles and descriptions every two weeks and check the results.
When to use OKR?
It is possible to use OKR for companies of different sizes and times.
There is no clear definition that there is a more opportune moment, although it is a good starting point, for businesses in the initial phase that need to establish initial objectives.
OKRs will guide the company's way of organizing itself, as well as monitoring each step periodically. It is a tool to improve performance and efficiency.
The main idea is to use it to focus on what is really important to do in certain cycles, while “crossing out” what is not relevant. The goals need to be clear and it is good to have professionals responsible for checking the progress of the goals.
OKR: how important is it?
The importance of OKRs is to solve the problem that opened this text. Make a company's objectives clear to employees and seek to achieve them in the best possible way.
The business will be more agile, as short cycles – usually quarters – demand tangible results in this spectrum. At each end of the cycle, people get together to find out what was produced and what the next steps are.
This agility in the process is crucial for increasing the performance of any organization. It brings more autonomy to employees and allows quick feedback, so that mistakes can be corrected, if necessary.
And how can you avoid setting too many goals to achieve too few? O focus is an important role in OKR, knowing that many “no’s” will need to be said in the process of implementing the model.
What are the benefits of OKR?
One of the main benefits of OKRs is the fact that the model is not closed, with several flexible rules.
When Andrew Grove developed it, he did not indicate specific practices of what should be done. He didn’t create any “map” of OKR.
Most organizations adapt details of the methodology to their own reality. OKR is a transparent tool. All employees can and should have access to them.
OKRs also reinforce culture data-driven in companies, as every decision is made based on data analysis.
To be successful, it is essential that the stipulated objective has been designed based on tangible numbers and not “done on the fly”, as in popular jargon.
Difference between OKR and KPI
Three-letter acronyms that have the letter K, which are possible to correlate, but do not represent the same thing.
The meaning of OKR is what we bring here, the general method that relates objectives and goals.
KPIs are performance indicators. Metrics used to measure the performance and fulfillment of a task. It is possible to use KPIs to support results that are quantitative.
KPI is much more focused on results, while OKR concerns processes. As you can see, they do not cancel each other out, but they have different spaces in a management model.
OKR: how to implement this methodology?
If what you've read so far has caught your attention, find out below how to implement the methodology used by large global companies. The first step is not to be afraid of making mistakes. It can happen even with the use of OKRs, the important thing is to know what to do with them.
Start by defining goals that your business wants to achieve. For each objective, list two to five key results (KRs). Communicate and align with teams, updating the achievement of these results monthly or quarterly.
Think about the early wins. Value each achievement and create an OKR culture within teams. Try challenging the top of the hierarchy first and spreading to other parts. Leaders set an example.
Educate employees to understand the why behind OKRs. As much as it is a method used by large companies, this cannot be the only reason to do it. Explain more about the initiative, so that everyone is in tune with the objectives.
The OKR needs to be inserted into the company's day-to-day operations. Periodic meetings are necessary to monitor the evolution of results and a calendar foreseeing the definition of new OKRs, forming small cycles.
What are the tools used in OKR?
There are OKR tools (software) available, developed here and abroad. Not that they are mandatory to start implementing this model.
Most companies start without a professional tool, and evolve until they can purchase software.
The main tool for controlling OKRs is spreadsheets. You can use Google Sheets, for example. It must include a description of the objectives, the KRs, the source of data used as reference, base value and target value.
It is worth remembering the importance of data-based construction, therefore, data management are also important.
According to one McKinsey research, 53% of the companies that achieved high performance are adept at analytics.
Tips for putting together an OKR spreadsheet
Check out some tips for setting up and monitoring your OKR spreadsheet:
- Set clear goals: Identify the key results you want to achieve and set specific, measurable goals for each objective.
- Keep it simple: Avoid making the spreadsheet too complex. Use a clear, organized format that is easy to understand and update.
- Divide by quarters: Separate the spreadsheet into quarters to make it easier to track progress and allow for adjustments over time.
- Set realistic deadlines: Set realistic deadlines for each goal and regularly track progress to ensure you're on track.
- Track performance: Record the results achieved and compare them with the established goals. This will allow you to identify areas for improvement and make adjustments as needed.
- Use charts and visualizations: Use graphs and visualizations to visually present progress and make results easier to understand.
- Share with the team: Share the spreadsheet with the team so everyone is aligned and can track progress together.
4 mistakes made when applying the OKR methodology
Although it seems like a somewhat simple concept, applying OKR is not as easy as it seems.
Therefore, we have highlighted some common mistakes when applying the OKR methodology:
- Defining unclear objectives: One of the most common mistakes is setting goals that are too vague or too broad. It is essential that objectives are specific, measurable and achievable.
- Lack of alignment between hierarchical levels: The lack of alignment between the objectives of the organization, teams and individuals is a mistake that compromises the effectiveness of the OKR. It is essential that there is a clear connection between the different hierarchical levels.
- Ignoring the importance of key results: Key results are the heart of OKR, as they are what measure progress and success towards objectives. A common mistake is neglecting to define relevant, measurable and challenging key results. It is important to ensure that key results are defined carefully and aligned with established objectives.
- Lack of monitoring and review: OKR requires constant monitoring to evaluate progress and make adjustments when necessary. The lack of regular review compromises the agility and adaptation necessary to achieve the desired results.
What is the OKR technique?
The OKR technique or formula is as follows, according to John Doerr (former Intel manager):
We will (_______)
Measured by (______)
That is, “we will” is the objective, while “measured by” are the key results.
In this technique, what you want to achieve and how to measure the results at all stages are side by side. There are no other rules as defined, but you will hardly find key results that do not have numbers.
What are the OKR cycles?
OKR cycles are the periods determined for each proposed objective to be achieved. There is no pre-determined cycle at the origin of the concept. The duration will vary according to the company's needs, ambition and capacity.
A commonly used configuration is a longer cycle for the company's OKRs (six months or one year) and shorter cycles for teams (three months).
Cycles can also be subdivided into other phases: planning, monitoring and evaluation.
An OKR cycle always ends with evaluating results and planning the next cycle. The action plan is the most important part of a cycle ending, so that another can begin.
How long do OKR cycles last?
When we talk about an OKR cycle, there is no definitive answer about the duration of the cycles, as everything will depend on the company's business objectives.
However, it is important to work with small secondary goals, to monitor how far or how close you are to the main goal.
Finally, we will show the 3 most common OKR cycles. Check out:
- Quarterly cycles: OKR cycles lasting three months. This period provides a reasonable amount of time to set ambitious goals, implement effective strategies, and achieve tangible results.
- Cycles: For long-term projects, six-month OKR cycles may be a viable option. This allows for a longer time frame to adapt to changes and achieve complex results.
- Custom cycles: Some organizations opt for custom OKR cycles tailored to their specific needs. This flexible approach allows you to adapt the time frame based on operational context, team size and strategic objectives.
What are the types of OKR?
When classifying the types of OKR, it is important to keep in mind that there is no “official guide”. Nothing that resembles an “OKR bible” to be followed vehemently has ever been published.
It is not a prescriptive methodology. What exists are sets of practices that each company must adapt according to its reality.
When typing, it is possible to classify OKRs into three different sections: organizational, departmental and individual.
Organizational OKR
These are OKRS that guide the entire company. The company's entire strategy must have consequences in these OKRs.
Departmental OKR
Directional goals for teams. They may have specific objectives, but be properly aligned with the organization's purposes.
individual OKR
Individual OKRs must focus on performance and delivery, as expected for the area and expertise, of a given employee.
How to measure OKR results?
To measure the results of OKRs, you need to evaluate the percentage of key results that was achieved within each cycle. Therefore, this measurement can be represented from 0 to 100, with each number representing a topic for the action plan.
The 100% are unlikely to be achieved. 70% can indicate great performance and encourage more challenging goals. Something close to 25% or 30% is an indication of poor performance and the need for new alignments.
A common process for measuring OKR results is check-ins. These are short rituals focused on discussing the evolution of the teams' OKRs.
At check-in, we become aware of the difficulties encountered and seek the best ideas for new decision-making.
The meetings of check in are a vital part of OKRs. It is recommended that they be carried out at least every fortnight. A meeting of this type can last between 20 and 30 minutes and should not be too long to avoid distracting focus.
In an agenda check in of OKR, we can see the following topics:
- Assessment of current numbers for each Key Result;
- Conversation about obstacles to achieving goals Key Results;
- What are the main actions for the next week or fortnight;
- Debate on the level of confidence to comply with certain Key Results.
Now that you know what OKR is, how about learning how to define it in practice with the IFood method?
Download our free e-book on “How to set OKRs”?
